Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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What is true about investing in single
stocks?
a. | There is a low degree of risk. | c. | The risk is the same whether you invest in mutual funds or
stocks. | b. | There is a high degree of
risk. | d. | If the stock is from your employer, the risk is
lower. |
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2.
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Which one is not a risky investment?
a. | Commodities | c. | Viaticals | b. | Annuities | d. | Futures |
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3.
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Which is not true about investments:
a. | Never invest using borrowed money. | c. | Always invest only for tax savings purposes. | b. | Diversification will help lower the risk. | d. | Never invest only
for tax savings purposes. |
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4.
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A collection of money from different investors,
which is used to purchase stocks, bonds, or other investments, managed by a fund
manager:
a. | Company Stock | c. | Mutual
Funds | b. | Annuities | d. | Bonds |
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5.
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The most aggressive mutual funds tend to be
from:
a. | Companies that are a little younger and
growing | c. | Companies that are older and
well-established | b. | Companies that are
overseas | d. | All of the above |
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6.
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The KISS rule of investing teaches:
a. | The more sophisticated the investment, the
better. | c. | It is normal to have investments you don’t
understand as long as you have a broker. | b. | Keep things simple
and never buy anything you don’t understand. | d. | None of the
above |
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7.
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The risk return ratio says:
a. | When risk goes down, the return generally will go
up. | c. | When the risk goes up, the return generally will go
up. | b. | When the risk goes up, the return generally will go
down. | d. | None of the above |
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8.
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What is a type of annuity?
a. | Variable | c. | Fixed | b. | Stable | d. | Both a and c |
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9.
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Which of the following is a risk to consider when
investing?
a. | You could lose all of your money | c. | Your money is not liquid | b. | Inflation | d. | All of the above |
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10.
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Which is not a good investment?
a. | Gold | c. | Viaticals | b. | Commodities | d. | All of the above |
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11.
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Your piece of ownership in a company is
called:
a. | Share of stock | c. | Profit | b. | Dividend | d. | Portion |
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Matching
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a. | 5-10 year | f. | International | b. | Annuities | g. | Liquidity | c. | Bond | h. | Mutual Funds | d. | Borrowed | i. | Risk Return Ration | e. | Commodities | j. | Saving |
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12.
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Never invest using _______ money.
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13.
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When investing, you should always check the ____
track record.
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14.
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The availability of your money is called
______.
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15.
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A _______ is a debt instrument where a company
owes your money.
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16.
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Stocks from overseas companies are called ____
growth stock mutual funds.
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17.
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_____ are savings accounts with insurance
companies.
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18.
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_______ is for anything less than five
years.
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19.
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The _______ says that with investments , as the
risk goes up, so should the return.
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20.
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Oil and gold are examples of _____.
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21.
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In _______, investors pool their
money.
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Short Answer
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22.
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What is the difference between single stocks and
mutual
funds?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
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23.
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Compare and contrast saving and investing.
What is the primary difference between
them?
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
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24.
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Draw the Standard Mutual Fund Diversification chart
and assign each category a percentage. (Growth and Income, Growth, Aggressive Growth,
International)
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Problem: Enter saving or
investing in the blank provided below for each scenariol.
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25.
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__________________________You want to start
a college fund for your newborn child.
__________________________Your daughter has a wedding next
year.
__________________________You want to buy a car in two
years.
__________________________You want to open a Roth
IRA.
__________________________You want to buy a house within the next five
years.
__________________________Your daughter’s prom is in six months.
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